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Blockchain is key to Internet of Things democracy

The IoT is predicted to scale to hundreds of billions of devices. Blockchain may be the key to the IoT device decentralization and democratization needed for a connected future

Today’s IoT is comprised of more than a billion intelligent, connected devices. But that number is dwarfed by predictions, which say the IoT will proliferate by hundreds of billions connected devices.

As the number of connected devices grows from billions to hundreds of billions and as governments and corporations race to take control of devices and data, the IoT is in need of a rescue mission. This “rescue” will require business and technology leaders to fundamentally rethink their technology strategies.

To guide executives in making strategic IoT investments and to better understand the connected future and its impact across industries, we conducted the 2014 IBM Internet of Things Study.

Our study finds that a low-cost, private-by-design “democracy of devices” will emerge to enable new digital economies and create new value while offering better products and user experiences.

Among other findings, the study revealed that adopting peer-to-peer computing to process the hundreds of billions of IoT transactions can significantly reduce costs associated with installing and maintaining large centralized data centers. Successful decentralization of the IoT also lies in being trustless: an environment in which there is no need for participants to be trusted and no centralized, single point of failure.

We make the case that blockchain, a technology that has fundamentally changed notions of centralized authority, works for the IoT. In our vision of a decentralized IoT, blockchain is the framework facilitating transaction processing and coordination among interacting devices.

Here, we list challenges to future IoT growth, define why blockchain is right for IoT, and describe how companies can successfully navigate these changes. This will allow companies to harness the power of the IoT to improve operational efficiency, unlock the full capacity of physical assets, and digitally integrate value chains. Companies who ready themselves, will be the winners in the IoT economy.

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Meet the author

Veena Pureswaran

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, Associate Partner and Global Research Leader for Quantum Computing, IBM Institute for Business Value

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Originally published 18 February 2016